NBER Working Papers and Publications

Exploiting new data on county-level variation in alcohol prohibition from 1933 to 1939, we investigate whether the repeal of federal prohibition increased infant mortality, both in counties that repealed and in their neighboring counties. Using a binomial fixed-effects model, we find that repeal is associated with a 4.0% increase in infant mortality rates in counties that chose wet status via local option elections or state-wide legislation and with a 4.7% increase in neighboring dry counties, suggesting a role for cross-border policy externalities. Cumulatively, these estimates imply 26,960 infant deaths that could potentially be attributed to the repeal of federal prohibition.

What is the role of transport improvements in globalization? We argue that the nineteenth century is the ideal testing ground for this question: freight rates fell on average by 50% while global trade increased 400% from 1870 to 1913. We estimate the first indices of bilateral freight rates for the period and directly incorporate these into a standard gravity model. We also take the endogeneity of bilateral trade and freight rates seriously and propose an instrumental variables approach. The results are striking as we find no evidence that the maritime transport revolution was the primary driver of the late nineteenth century global trade boom. Rather, the most powerful forces driving the boom were those of income growth and convergence.

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